Is your house clean? I’m going to talk about cycle counting and how it can be compared to keeping up with all the daily, weekly, monthly, or quarterly tasks that are required to maintain a well-kept and clean house. An inventory management system like our Small Business Inventory Management App for Salesforce can be an incredible tool for providing visibility into inventory availability and creating efficiencies in receiving, backflushing, and shipping inventory. But your inventory is only accurate if every single item is received properly, every consumption of raw materials is logged correctly, and all shipments and scrapped materials are accounted for. If any of these unique transactions aren’t logged properly, it can create stockouts for production or sales.
To improve inventory accuracy, many companies implement cycle counts. Cycle counts are an inventory auditing process where a subset of the inventory is counted on a periodic basis. Cycle counting is less labor-intensive and less disruptive than a full inventory count. Comparing cycle counting to cleaning a house, it’s a bit like picking one specific task like vacuuming or one specific room in the house rather than tackling the entire house at once. And if you don’t stay on top of it you might end up with mold growing in the fridge and the bathrooms! Cycle counts can be performed daily, weekly, or at any cadence that makes sense based on the size of your inventory and the types of products you sell. Here are a few ways to determine the appropriate cadence for cycle counts:
-
- Inventory Turnover. High turnover items that sell quickly or are critical to business operations should be counted frequently–daily or weekly as needed. Medium turnover items can be counted bi-weekly or monthly. Low turnover items that don’t move quickly can be counted monthly or quarterly. Have you ever run out of clean underwear because the laundry isn’t getting done? These are high turnover items that must be taken care of often! But how often do you need to dry clean your suit coats? Probably not too often, but still needs to be done periodically.
- ABC Analysis. This involves categorizing into A items (high value, low quantity), B items (moderate value and quantity), and C Items (low value, high quantity). Cycle counting is based on inventory value where A items should be counted frequently, B items should be counted monthly, and C items should be counted quarterly. If you highly value a clean kitchen to cook or eat in, that would be an A item. But maybe the light bulbs don’t need to be changed out quite so often.
- Seasonal Adjustments. During peak seasons, increasing the frequency of cycle counts can be beneficial by ensuring available inventory for production and sales. Don’t forget to clean your gutters each season to prevent blockages that result in water damage!
- Annual Reviews. A complete inventory count on an annual basis can catch any discrepancies that may have been missed throughout the year. Deep cleaning once or twice a year is a good thing, but it requires a lot of work.
There are many reasons why cycle counting is beneficial. It can provide early detection of issues such as data entry errors, theft, or misplaced inventory before they escalate into a bigger problem. It can also ensure you are fulfilling orders more reliably and reducing chances of stockouts or overselling. By keeping your inventory accurate, you can optimize stock levels and have better forecasting, planning, and decision-making for your operations. This leads to better efficiency and increased profitability. Need I say more about the importance of keeping your house clean and maintained?
Using the Inventory Management App from InventoryWorks, you can categorize your inventory to easily identify which items should be cycle counted on a given cadence. We also provide a Minimum Inventory field so that you can receive reports on any items that need to be reordered based on your desired minimum inventory triggers. Watch a demo on the Salesforce AppExchange for more information on how we can help you get better visibility into your inventory!
